The tariffs imposed by the Trump administration since last November against large scale exporting nations to protect local industries could come as a blessing in disguise to non affected exporters who could leverage on the opportunity to boost exports and attract foreign direct investments.
US importers will look for alternative sources for finished goods and raw materials to avoid cost escalation due to tariffs.
However, while there could be positive trickle down effects, there could also be downside effects on global exports.
Laugfs Holdings Ltd Chairman, W.K.H. Wegapitiya said Sri Lankan exporters can make good use of the opportunity to expand their exports and the country could gain by attracting foreign direct investments.
He said a Chinese manufacturer had shown interest in shifting his operations and exporting from Sri Lanka.
Similarly leading business personalities said the US tariffs on Chinese, Canadian and Mexican exports could be a silver lining in the dark clouds for Sri Lanka.
CEO, Lanka Harness Co. (Pvt) Ltd, Dr. Rohan Pallewatta said there are pluses and minuses of the Trump administration’s tariffs on exporting nations.
The positive side of the tariffs could be that US importers could look to alternative markets for sourcing goods while the negative side could be the reduction in US imports due to the drop in consumption.
President, National Chamber of Exporters, Jayantha Karunaratne said along with the spate of US tariffs, the possibility of the Ukraine-Russian war ending could pave the way for Sri Lanka to increase exports to those countries.
However, the hard line followed by the Trump administration on Iran could further stifle our tea exports to the Middle East buyer.
Former Central Bank Deputy Governor Dr. W.A. Wijewardena in a recent media report said that when a country introduces a tariff, the goods which come from the affected country will be more expensive in the land of tariff.
He said the actual punishment will be borne by the country’s citizens and not by those in the exporting country. The cost to the citizens in the exporting country will be minimal because they could divert their exports to other countries and maintain the export and income levels.
However, according to exporters and trade experts the real effects of the US tariffs on imports will be known as time goes on.
As Canada, Mexico, and China look for alternative destinations for their exports, it could open new markets and increase competition in global trade.
Trump issued an executive order imposing a tariff of 25% on imports from Mexico and Canada and 10% on those from China.
The three countries have come up with countervailing tariffs thereby creating a tariff war with USA.
China’s latest tariffs on US goods include a 15% border tax on imports of US coal and liquefied natural gas products. There is also a 10% tariff on American crude oil, agricultural machinery and large-engine cars.
Meanwhile, trade experts have warned that increasing protectionist policies adopted by certain countries could significantly impact the growth prospects of developing economies.
